Berlusconi vows to refund tax money

FORMER Italian premier Silvio Berlusconi says that if his coalition wins this month's election, he will give back the money Italians have had to fork out for an unpopular property tax.

Speaking at a rally in Milan, Berlusconi vowed to scrap the levy and refund the taxes paid on primary residences in 2012 "as compensation for an erroneous decision by the state".

The promise was greeted with a standing ovation from the audience, made up of members of his centre-right People of Freedom Party (PDL).

The real estate tax, known as IMU, was abolished by Berlusconi in 2008 but reinstated last year as part of Prime Minister Mario Monti's austerity budget in the crisis-hit country.

Berlusconi, who has had three stints as prime minister, said he would order the refund if he becomes "economy minister" in a government led by his protege Angelino Alfano following the February 24-25 election, adding that the move would see financial authorities for once "bring smiles" to taxpayers.

Berlusconi's centre-right coalition has been rising in the polls recently ahead of the general election, narrowing the gap with the centre-left coalition which is tipped to win the vote.

Before announcing what Italian media labelled a "shock proposal", the flamboyant 76-year-old said the IMU stood for everything that was wrong with Italy in tough economic times.

"One should never touch the primary residence which is the pillar on which families build," he said, estimating that the reintroduction of the tax had seen property values plummet "by five to 20 per cent", and had led to a drop in home sales and construction.

Berlusconi assured his supporters that the lost revenue from the tax refund, estimated at four billion euros ($A5.24 billion), would be covered through public spending cuts, raising taxes on cigarettes and games of chance, and taxing the assets of Italians in Switzerland - a tax he said would eventually bring in five billion euros ($A6.56 billion) a year alone.